When it comes to Donald Trump’s MAGA economy, it’s all relative.
On Wednesday morning, just minutes before the advance read on Q3 GDP was released, the president tweeted this: “The Greatest Economy in American History!”
As it turns out, the US economy grew 1.9% in Q3, which is a solid beat versus consensus (1.6%) but a country mile away from any superlative that indicates we’re enjoying an economic renaissance that historians will one day marvel at as they pen the story of America in the 21st century.
In fact, the Q3 print is tied for the second-worst print of the last 15 quarters, despite coming in better than expected. The range from 76 economists was 1% to 2.1%.
Personal consumption again carried the day, rising 2.9%, a decent curtain call from the outsized 4.6% logged in Q2. That was better than the 2.6% consensus was expecting, and comes as something of a relief given signs that consumption may be slipping.
Unfortunately, nonresidential fixed investment dove 3% in the period, after dropping 1% in the prior quarter. That, folks, is the biggest drop since Q4 2015.
Final sales to private domestic purchasers rose 2.0% in the third quarter, after rising 3.3% in the prior period. That’s not fantastic either. Investment in structures collapsed 15.3% (led by oil and gas).
Net exports weighed on the economy, exerting a 0.08% drag. Federal spending buoyed government consumption.
Overall, this is nowhere near historic, but it’s certainly not terrible, and it’s likely that the White House sees it as something of a relief. Although 1.9% isn’t even in the same universe as the administration’s 3% growth “target”, the third quarter could have been worse and it appears that the consumer is still willing to underwrite the expansion – at least for a little while longer.
Core PCE rose 2.2% in Q3, after rising 1.9% in the prior quarter.